New Zealand Dollar Rises, Signaling Carry Trade Return

The New Zealand dollar reached a new a new 3-year high against the greenback today and appreciated against the Japanese yen, showing that the carry trade tendencies are growing stronger now.

The kiwi (as the NZD is often called) rose against its major counterparts before some major macroeconomic releases will be reported tomorrow, including April business confidence and money supply data for March. The currency is demonstrating 11.8 percent gain versus the US dollar and 16.4 percent against the Japanese yen since March 17.

The carry trade strategy, which involves buying high-yielding currencies (NZD, AUD) using the cheaper ones (JPY, USD), is now quite evident. Market analysts talk about its return to the Forex. Though, the question is whether this carry trade period will be as long as the previous one (2002–2008).

NZD/USD rose from 0.8001 to 0.8041 as of 12:38 GMT today; the daily high was at 0.8052 — the maximum level since March 2008. NZD/JPY increased from 65.48 to 65.75, while AUD/NZD fell from 1.3399 to 1.3371.

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